Argentine Education: A Tax Analysis from a Social Returns Perspective

Abstract

“Educational investment” is frequently used as a reference for educational expenditures, due to its positive returns in future terms. This article verifies that its benefit can overcome the individual agent, triggering social (economic) returns as a future higher tax collection. It is conducted a simulation based on a dissimilar income tax treatment to determine whether the education productive approach justifies its public intertemporal incentive in Argentina. Under this treatment, the internal rate of return is maintained in a positive field (around 12% per capita, even with diverse sensitivity scenarios), even after considering those students who do not finish their degrees or those who drop out. On the one hand, financing public education is a profitable decision insofar as its present investment triggers a maximization of future aggregate income. In this sense, a special tax treatment (income tax deduction), could be a useful policy, allowing a maximization of social returns and potential growth in public funds.